A Budget at Last–Rauner Stranglehold Broken

After 738 days without a budget that included a highly necessary increase in revenues, last Friday the Illinois House over-rode Rauner’s veto of a bipartisan tax-increase. That ended a wild holiday week of both Senate and House passing the tax increase, Rauner vetoing it, the Senate over-riding the veto with the help of one Republican and Speaker of the House Madigan finally delivering the goods aided by 10 courageous Republicans.

It’s an imperfect law but had the step not been taken we would have fallen off an economic cliff: Illinois’s credit reduced to junk and the potential of school and hospital closures among other reductions or cessation of vital services. It went this long because Rauner refused to sign any budget that included tax increases without demanding a string of “reforms,” some of which might be useful, but none had anything to do with budgetary matters. They were basically aimed at busting public unions and crippling the dominant Democratic Party.

Rauner held the state hostage for more than two years because of a lucky break. He entered office just as a four-year temporary tax increase expired. In 2010 that increase boosted our flat-rate income tax from 3 to 5 percent for individuals and 4.8 to 7 percent for corporations. Upon expiration in 2014 it reverted back.

The new rate is permanent: 4.95 percent for individuals and 7 percent for corporations–fractionally lower, actually, than individuals were paying from 2010-2014, though those angered by the increase apparently forget they were paying more back then.

The $36.1 billion budget cuts spending by about $3 billion compared to last year, reducing public universities’ funding by 5 percent. More education funding is needed, especially for Chicago schools. Pension reform is sorely needed.

The state still has a $15 billion backlog of unpaid bills, but we will slowly be able to begin repayment. Having lost the big battle, will Rauner finally come around or will he take reprisals and try to veto further necessary revenue?

Illinois clearly needs a graduated income tax like the fed’s–34 states already have one. Our new rate puts us in line with dozens of states, ranging from Georgia’s 6 percent to Ohio’s 4.997 percent. We’re in the middle, while the 10 highest brackets range from California’s 13.3 percent to Wisconsin’s 7.75, with New York at 8.82. Seven states have no income tax.

Back in 1932 a graduated income tax was proposed for Illinois, but an income taxes was found unconstitutional. In 1969 Governor Richard Ogilvie got a 2.5 percent individual and 4 percent corporate tax passed, which was incorporated into the 1970 constitution–which locked in a flat rate, outlawing a graduated tax. It will take a change in the constitution to establish one .

Rauner, up for election next year, will campaign as the man who fought high taxes. Democrats and the Republicans who supported them will run as principled people who saved Illinois from catastrophe. The controversial political boss Madigan could find himself in the unlikely role of hero.